The term "RNA interference" (RNAi) refers to a gene inactivation pathway that is operational in almost all eukaryotic cells. It begins with cleavage of long dsRNAs into 21-25 nucleotide (nt) segments (siRNA) by the RNaselll-like nuclease Dicer and typically leads to degradation or inactivation of mRNAs that bear sequence complementarity to the siRNAs. The natural role of RNA silencing has been linked to the processing of endogenous RNAs that regulate gene expression (miRNAs) and a defense mechanism against transposons and viruses. Viruses in turn have developed counter-defenses by encoding proteins that suppress RNA silencing. More than a dozen virus-encoded suppressor proteins have been identified, most of them in (+)-sense RNA viruses. This proposal outlines experiments to investigate how the insect nodavirus Flock House virus suppresses RNAi in infected hosts. FHV encodes a powerful RNAi inhibitor called B2. B2 is a small RNA binding protein that specifically, but sequence independently, binds to long and short dsRNAs. It inhibits RNAi in diverse species including insects, plants, mammals and worms. The protein has been characterized biochemically and structurally but its exact mechanism of action, particularly during the FHV infection cycle, remains unknown. The proposed project has three specific aims: (1) to identify viral and host determinants critical for induction and suppression of RNAi in FHV-infected Drosophila cells; (2) to test mechanistic possibilities by which B2 suppresses RNAi during FHV infection and (3) to create trans-dominant B2 variants to develop FHV as a vector for foreign gene expression in insects. Based on the preliminary data presented in this proposal we believe that we are in a unique position to delineate the molecular events that lead to suppression of RNAi and thereby provide insights into the regulation of the RNAi pathway. In the longterm, we hope to develop the FHV/B2 system as an important tool to study the natural role of RNA silencing in Drosophila and to develop novel approaches for sustained transgene expression in a variety of insects.